Monday, March 5, 2012

Pressure mounting on Oracle to drop patent claims against Google and focus on copyright

I have recently been reporting less frequently on Oracle v. Google than at other stages of that litigation, but I am still monitoring the case and I was mostly waiting for some important filings that will have to be made on Friday, March 9, but in the meantime, a few things have happened that warrant another update.

Ten days ago, I reported on an order by which Judge William Alsup let the parties know that the envisioned mid-April trial may again have to be postponed in order to let the ongoing reexaminations of Oracle's patents run their course. He asked the parties to comment on this by this coming Friday (March 9). I said at the time that Oracle may simply have to drop its patent infringement claims (with prejudice) in order to have the copyright part of the case go to trial in the near term.

On Thursday, I reiterated (in a post on Google's Android-related litigation options) that it's amazing how successful Google's reexamination requests have been. I said that I can't think of any other high-profile litigation in which an organization like Oracle asserted seven patents only to see them go down the tubes during the course of the lawsuit.

Later that day, Judge Alsup entered a supplemental order that suggested in even stronger terms than the previous one that Oracle should now give serious consideration to a dismissal with prejudice of at least some of its patent infringement claims:

"Oracle should state a clear answer to the following question: given that the examiners have issued final rejections on patents '720, '702, '476, and '205, and Oracle has only withdrawn the ’476 patent, but still wishes to go to trial on patents ’720, ’702, ’205, '520, and '104, and Oracle still wishes to have an instruction that those patents must be presumed valid and can only be found invalid by clear and convincing evidence, would it be better to postpone trial until after final decisions by the PTO on administrative appeal? Also please answer: to avoid this problem, will Oracle irrevocably withdraw with prejudice patents '720, '702, and '205? The views of Google on these questions will also be appreciated."

In a formal sense, that order gives Oracle two options: effectively postpone trial (for the whole case including copyright) by a considerable amount of time, or drop (without any chance of reasserting them against the same Google technology) three of the patents.

Scott Daniels, an experienced patent litigator and author of the WHDA Reexamination Alert blog (a great blog that focuses on patent reexaminations), told the IDG News Service that the appeals process Oracle would have to wait for is typically concluded within 12 to 18 months, "but 'outliers' can extend the process longer".

The other option of withdrawing with prejudice three of the patents would mean that only two of the original seven (and currently five) patents would still be in the game. One of them is the '520 patent, which survived reexamination but may not be infringed. The other one is the "James Gosling patent", which has been rejected on a non-final basis. Even if Oracle withdrew the three patents Judge Alsup listed in the March 1 order, the judge may still be inclined to postpone trial at least until the end of the reexamination process for that one. The judge just wouldn't want to suggest the withdrawal of the Gosling patent at this stage since a first Office action is, by definition, non-final, even though the final Office actions relating to Oracle's patents weren't any better for Oracle than the original ones (and history may repeat itself here with the Gosling patent).

On Friday, Oracle still filed a reply letter in order to keep fighting for the right to amend its infringement contentions regarding the '205 patent. Since the '205 patent is one of the three patents that have been rejected by the USPTO on a final (though appealable) basis, it's unlikely that Oracle can win anything based on that patent at a near-term trial (where the jury would be informed of the USPTO's final, albeit appealable, rejection of all of the asserted claims of that patent). I guess Oracle still made this effort in order to keep all options open until it replies to Judge Alsup's orders on Friday, March 9.

On Wednesday, there will be a hearing regarding Oracle's third damages report. With a view to that one, Judge Alsup today entered an order telling the parties to prepare to discuss at the Wednesday hearing "the value of the '104, '205, and '720 patents if they ranked as the bottom three of the 'top' 22 [Java] patents".

It's unclear by which criteria the judge chose those three patents (the Gosling patent plus two that have been rejected on a final basis). With access to the damages report, I might have an answer. At any rate, the fact that any patent damages will have to be strictly apportioned to those patent claims that (if any) will be deemed valid and infringed means that Oracle may not be able to win huge patent damages if most or all of its patent claims fail.

Oracle faces a tough choice on Friday. At Wednesday's damages hearing it will get a better idea of how much of a financial point there is in still insisting on its patent infringement claims if it's going to be a long shot to prevail on even one of those claims. But regardless of damages, Oracle's bigger problem here is a potential delay of the trial by a couple of years.

Oracle could withdraw all of its patent infringement claims in order to clear the path to a near-term copyright trial. In mid-January, Oracle already made a bold and surprising proposal to stay or dismiss without prejudice its patent infringement claims for the purpose of a speedy copyright trial. While that proposal would have meant considerable delay for its patent infringement claims to go to trial, Oracle would still have had the opportunity to resume the patent part of the case after such an event as a favorable outcome of one or more of its appeals to the USPTO's Board of Patent Appeals and Interferences. If Oracle now accepts a partial or complete dismissal of its patent infringement claims with prejudice, it doesn't get the best of both worlds.

It would actually be in the interest of justice to take the copyright part of the case to trial very soon (since copyrights can't be reexamined by a patent office) and to give Oracle the chance to salvage some of its patent claims and possibly pursue them again much later. But Judge Alsup appears to dislike the idea of his court having to deal with Oracle v. Google at more than one trial.

On Friday, Oracle could also propose to take only the '520 patent to trial. Many patent infringement lawsuits are about a single patent from the outset, so it wouldn't be unusual at all. Oracle itself must know how much of an infringement case it really has for the '520 patent -- and whether Google can easily work around this one. If infringement is a long shot (and there are indications that it may be) and/or if Google can easily work around this even if it found to infringe, it might be better to really just focus on copyright at this stage.

If Oracle does not make a proposal on Friday that paves the way for a near-term trial, it either hopes to be able to still negotiate with the judge (based on the tone of his orders, I'm not sure that this would work) or it thinks that it could get some settlement (not an extremely lucrative one, but possibly a face-saving exit) if Google just doesn't want to deal with protracted uncertainty due to Oracle's appeals of the reexamination results.

In mid-January, Oracle definitely appeared to be very serious about taking the copyright part of the case to trial at the earliest opportunity, and it was prepared to make some sacrifice. For Oracle's stated goal ("bring Android back into the Java fold"), a near-term trial is absolutely key. We'll see if Oracle is now willing to make a concession with irreversible, definitive consequences for its patent infringement claims.

One of the great unknowns here is whether Oracle still has a bunch of other Java patents that it could assert against Android. It certainly selected the seven patents it considered most suitable in the summer of 2010, but with the benefit of 20/20 hindsight, Oracle itself may now think that some other patents would have been a better choice. If Oracle has other Java patents to assert, it will want the ongoing case to be resolved as soon as possible. If Oracle wins on copyright, it may not need to assert more patents. If it loses on copyright, it at least knows that its only chance is another group of patents. Starting a second patent lawsuit now in the U.S. could result in consolidation (against Oracle's will) with the ongoing one and another huge delay.

Judge Alsup has made pretty clear what he wants Oracle to think about with a view to the answer deadline on Friday. He may also reinforce that message, in the appropriate context, on Wednesday. I wouldn't be surprised if Oracle's remaining patent infringement claims against Google had less than 100 hours to live.

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About Me

Florian Mueller is a former award-winning intellectual property activist with 25 years of software industry expertise spanning across different market segments (games, education, productivity and infrastructure software), diverse business models and a variety of technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof.) He is now developing a game app for smartphones and tablet computers.